Medicare provides vital health care coverage to millions of adults ages 65 and older and to some younger persons with a disability or end-stage renal disease. The program pays for a portion of the costs for certain inpatient and outpatient health care services and, for some beneficiaries, prescription drug costs. Yet, contrary to popular belief, Medicare does not cover all health care–related costs. Using the 2018 Medicare Current Beneficiary Survey, this Spotlight highlights the high out-of-pocket spending that many Medicare beneficiaries face. This report details actual health care spending by people enrolled in traditional Medicare and shows how large the financial burden of health care is for them, based on costs relative to income (see the appendix for methods). It also highlights the need to consider targeted policies to protect people with Medicare from burdensome health care spending, especially as enrollment continues to grow, and outlines some guiding principles for any related Medicare policies.
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